For seniors, finally some good news about Medicare HMOs

The 1.4 million California seniors who belong to Medicare HMOs are getting more bang for their buck this year, reversing a two-year period during which benefits had eroded, according to a new study released today.

“We’re finally seeing some good news,” says Dr. Mark Smith, president of the California Healthcare Foundation, an Oakland-based philanthropic group that along with Consumers Union produces the annual survey. “The past two years haven’t been easy for seniors.”

The survey of California health plans, which rates HMOs using a sliding scale of one to five stars, shows a significant jump in the overall rating of most plans. The survey is intended to assess a plan’s value to consumers. The ratings are compiled by adding up the total benefits a plan offers -- from what doctor services are covered to whether non-physician benefits such as chiropractic care are included -- and then subtracting members’ out-of-pocket costs. Out-of-pocket costs include such things as co-payments for prescription drugs and office visits.

Overall, almost a third of the California plans earned a top rating of four or five stars; last year, only 11% of plans were rated so high.

The results varied considerably across the state. In Los Angeles County, for instance, the number of HMOs with a four- or five-star rating increased from seven plans in 2003 to 13 in the latest survey. Orange County had 10 HMOs with a four- or five-star rating, up from three plans the previous year. In contrast, Napa County, which has only one HMO serving Medicare recipients, saw its only plan fall from a two-star rating last year to a single-star rating.

Experts say there’s one main reason why HMOs are offering richer benefits: The recent federal Medicare legislation, which adds prescription drug coverage in 2006, also increased payments to HMOs that Medicare recipients. The law requires insurance companies to use that money to restore benefits, lower costs or both.

People 65 and older and disabled persons have several options when choosing a Medicare plan. Most Californians sign up for a traditional fee-for-service plan, which allows more flexibility but typically includes higher charges for office visits and tests. Conventional Medicare plans don’t cover prescription drugs. Seniors who enroll in one of the few-dozen Medicare HMO plans get less choice of which doctors they can see but often receive more benefits.

For years, the main selling point of Medicare managed-care plans for seniors has been coverage for prescription drugs, which can amount to hundreds of dollars per month. However, HMOs have been whittling away at the drug benefit for several years. Many Medicare HMOs have stopped covering prescriptions medications altogether, while others now pay for only generic drugs. According to the survey, drug coverage was the only benefit category that declined from last year.

The survey also provides a separate rating for health plans’ drug coverage. Statewide, this year about two of every three plans received the lowest rating possible -- one star. Last year, just under half of the HMOs received the lowest rating. One reason for the decline: Kaiser Permanente, one of the largest insurers in the state, joined the list of Medicare plans that cover only generic drugs.

Karen Ignagni, president of America’s Health Insurance Plans, a trade group based in Washington, D.C., says many insurers have pulled back on prescription drug coverage because federal reimbursement rates for Medicare have fallen so dramatically in recent years. She says some insurers used this year’s rate increase to reverse recent drug benefit cuts while other insurers used the money to lower premiums or expand benefits such as disease prevention programs that help enrollees better manage their health.

Smith, of the California Healthcare Foundation, says that even with the erosion of many HMO prescription drug benefits, the plans remain worthwhile for seniors. HMOs may be a less costly option because out-of-pocket costs have risen faster under traditional Medicare plans, he says.

The full results of the California Healthcare Foundation/Consumers Union survey can be viewed online at www.CalMedicareOptions.org.

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Rating the HMOs

The California Healthcare Foundation and Consumers Union published annual rankings of HMOs serving the Medicare population in California. The plans are given star ratings, with five stars indicating “the best value for your money” and one star “the worst value for your money.” Below are the top-ranked plans in five Southern California counties. For complete results, go to www.calmedicareoptions.org.

Los Angeles County

Blue Shield 65 Plus Value Plan *****

CareMore California Medical Advantage *****

Universal Care Health Advantage Plan A *****

UHP Healthcare for Seniors *****

PacifiCare Secure Horizons Value Plan *****

Orange County

Blue Shield 65 Plus *****

CareMore California *****

UHP Healthcare for Seniors *****

(Seven plans received 4-star ratings:

Universal Care Health Advantage Plans A and D; Scan Health Plan; PacifiCare Secure Horizons Standard Plans I and II; Health Net Seniority Plus; Aetna U.S. Healthcare Golden Medicare Plan.)

Riverside County

Inter Valley Health Plan ****

Scan Health Plan ****

PacifiCare Secure Horizons Standard Plan I ****

(Four plans received 3-star ratings: Aetna U.S. Healthcare; Blue Shield 65 Plus; Kaiser Permanente Senior Advantage; Health Net Seniority Plus.)

San Bernardino County

UHP Healthcare *****

Inter Valley Health Plan ****

Scan Health Plan ****

Blue Cross Senior Secure ****

PacifiCare Secure Horizons Plan I ****

Ventura County

PacifiCare Secure Horizons Plan I ***

Kaiser Permanente Senior Advantage **